Statistics in the IPP

The IPP includes a data visualisation tool containing the main available indicators relevant to a country’s innovation performance. Indicators are sourced primarily from the OECD and the World Bank, as well as from other sources of comparable quality.

The tool provides the ability to customise the selection of comparator countries and time periods, to draw various types of attractive tables, charts and maps, and to export the data in a variety of formats.

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The IPP’s Communities of Practice (CoPs) provides live and interactive spaces where you can participate in events, learn about projects and topics related to innovation policy, contribute to blogs and discussions and share documents. Welcome!

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Demand for financing innovation

What is the nature of demand for financing innovation?

Access to finance is a key driver in the creation, survival and growth of innovative firms. Lack of finance may prevent firms from investing in innovative projects, improving their productivity, financing their growth, covering working capital requirement and meeting market demand (see Actors and contribution mechanisms for financing innovation).

Demand for financing innovation comes from a variety of actors, including:

Firms engaged in innovation (see Firms’ access to finance for innovation). Innovative firms face several barriers for accessing finance. Finance mismatch may occur when supply of finance does not meet demand. Potentially profitable projects might not be financed. One of the main reasons for this capital market imperfection is the risk arising from information asymmetries between lenders/investors and borrowers.

Innovative entrepreneurs (see Access to finance for innovative entrepreneurship). Innovative entrepreneurs suffer from a lack of financing for innovation, in particular in the seed and early stages of business development. They face specific financial constraints due to their inherent riskiness, insufficient collaterals and lack of track record.

Universities and public research institutes (see Finance for public R&D). Financing requirements arise for public R&D aimed at increasing the stock of knowledge so as to provide the basis for the development of new products, processes and technologies. Additional financing needs arise when it comes to technology transfer and commercialisation efforts (see Finance for technology transfer and commercialisation). These organizations may include firms as well as universities and public research institutes that transfer academic inventions via the sale, transfer or licensing of intellectual property to existing firms or to new ventures (e.g. through TTOs and academic spin-offs).

Even if the innovation process may involve the same stages in small start-up and a large multinational, the sources of finance that they have available vary significantly. Large firms can more easily finance their R&D activities, whether using internal resources, getting a loan from a bank (using their tangible assets as collateral if required), issuing bonds, or raising equity finance in the stock markets. Start-ups do not have as many assets to use as collateral and their innovation investment is less diversified, and may also represent a much larger share of their activities for really innovative firms. As a result, their funding options are much more limited, and often need to rely on friends and family before being able to access other sources of capital. The “funding escalator” metaphor is often used to describe how the sources of funding available evolve as the firm develops:

Source: Cardullo (1999)

What are the policy questions regarding demand for financing innovation?

Scrutinizing investments according to sources of funding, types of R&D (basic research, applied research or experimental development), priority areas, expenditures on deployment and commercialization, and expenditures on facilities and research infrastructures

Aligning funding to public R&D centres to strategies set by industrial and innovation policies

Including a structural budget framework, in which investments in national research priorities and thematic fields are complemented by closer scrutiny of how these priorities should be met

Regularly assessing the overall efficiency of investments in public R&D

Encouraging the development of special intermediary organizations such as technology transfer offices to facilitate science-industry links

Promoting consulting and extension services by universities and PRIs (e.g. improving legal and regulatory frameworks that allow for more open collaboration between firms and universities on the consultancy projects and beyond, promoting institutional development to enable effective science-industry consultancy links and other forms of collaboration)